Galaxy Digital and Zodia Custody Partner to Advance Market Development

Background of the Partnership: Deep Integration of Traditional Finance and Crypto Custody

Galaxy Digital, a global leader in crypto asset investment management, entered into a strategic partnership with Zodia Custody, a compliant custody institution backed by Standard Chartered Bank, in 2024 to jointly launch crypto asset services for institutional investors. The partnership aims to address two major pain points faced by traditional financial institutions entering the crypto market—asset security and regulatory compliance. According to industry data, the global crypto custody market exceeded $20 billion in 2024 with a 25% annual growth rate. Zodia Custody, with its bank-grade risk control system and cross-chain support capabilities, has become one of the preferred partners for institutional clients.

The first milestone of the partnership was the launch of the Xtrackers Galaxy physical Bitcoin and Ethereum ETCs, which debuted on Deutsche Börse in April 2024 with an annual management fee of just 0.35%, and underlying asset custody provided by Zodia Custody. By combining crypto assets with traditional financial instruments, this product lowers the entry barrier for institutional investors while meeting the stringent requirements of the EU’s MiCA regulations.

Technical Architecture: A Dual Revolution in Security and Efficiency

Zodia Custody’s custody solution is based on cold-hot wallet segregation and multi-signature mechanisms, supporting 25 mainstream crypto assets including Bitcoin and Ethereum. Core technical highlights include:

• Independent account segregation: Each client’s assets are stored in separate addresses to avoid fund mixing risks;
• Real-time settlement protection: Smart contracts automatically trigger liquidation thresholds to reduce losses from market volatility;
• Cross-chain interoperability: Integration with public chains like Solana and Avalanche to support multi-chain asset management for institutions.

Galaxy Digital enhances the liquidity of ETC products through institutional-grade trade execution algorithms. For example, its Bitcoin ETC uses a physically backed model, where each ETC corresponds to real BTC held on-chain and verified in real time via Zodia Custody’s transparent audit system. This model attracted over $4.7 billion in inflows in 2024, capturing 32% of the European crypto ETC market share.

Compliance Progress: Tackling Global Regulatory Framework Challenges

With the EU’s MiCA regulations nearing full implementation, Zodia Custody became one of the first to obtain an EU Electronic Money Institution (EMI) license and made three key upgrades for MiCA’s custody requirements:

1. Data sovereignty assurance: Customer data is stored on servers within the EU, compliant with GDPR;

2. Enhanced AML compliance: Integrated on-chain monitoring tools from Chainalysis and Elliptic for transaction traceability;

3. Improved capital adequacy: Operating capital increased from €1.25 million to €3 million to enhance solvency.

Galaxy Digital leveraged the Grayscale Trust compliance channel to incorporate its ETC products into the portfolios of traditional asset managers. As of May 2025, its managed crypto assets have reached $8.9 billion, with 62% coming from pension funds and family offices.

Market Impact and Ecosystem Expansion

Further developments from 2024–2025 have strengthened their market position:

• PayPal PYUSD integration: In March 2025, Zodia Custody became the official custodian for PayPal’s stablecoin PYUSD, boosting its cross-border settlement volume by 140% in a single month;
• Binance Alpha program: Galaxy Digital’s ETC products were whitelisted for Binance institutional clients, allowing users to stake ETC shares for leveraged trading limits;
• Compliant derivatives innovation: Launched options contracts based on ETCs, enabling institutional clients to hedge BTC volatility; first-week trading volume exceeded $120 million.

Retail investors interested in such products can use JuCoin’s staking services for stable returns.

Future Challenges and Strategic Directions

Despite notable achievements, both parties still face several challenges:

1. Regulatory fragmentation: The U.S. SEC is increasing scrutiny of staking services, potentially affecting ETC yield structures;

2. Technology cost pressures: Deploying privacy-preserving technologies like ZKP (zero-knowledge proofs) may increase custody costs;

3. Intensified competition: Coinbase Custody and Fireblocks are competing for market share through lower fees.

Looking ahead, Galaxy Digital plans to launch RWA-backed ETCs, combining traditional assets like real estate and commodities with crypto custody. Zodia Custody is focused on building a cross-chain compliance bridge to enable seamless interaction between the Bitcoin ecosystem and DeFi protocols.